Tag Archives: 4) FX Trends

Overview: Yesterday’s strong US equity gains failed to carry over into today’s session. Japanese and Australian shares fared the best among the large Asia Pacific market, with the Nikkei off less than 0.4% and the ASX off less than 0.25%. However, China’s markets were off more than 1%, while Taiwan and South Korea indices slumped more than 2%. India is off nearly 1.5%. Europe’s Stoxx 600 is down 1.5% and is giving back all of its gains in the past three sessions. US...

Overview: Stocks are rallying. Nearly all the large bourses in the Asia Pacific region rose with China being the noted exception. In Europe, the Stoxx 600 is up over 1% to post gains for the third consecutive session, the longest advance this month. US futures are up around 2% as they return from yesterday’s holiday. While the US 10-year yield has edged up 3.26%, European yields are mostly softer, with the peripheral premiums falling more than core rates. The US...

Overview: Most equity markets in the Asia Pacific region lost ground today. China’s Shenzhen, Hong Kong, and India were notable exceptions. The MSCI Asia Pacific Index is at its lowest level since June 2020. Europe’s Stoxx 600 is forging a base ahead of 4000 and is trading quietly with a small upside bias. The French stock market lagging after Macron lost his parliamentary majority, is raising questions about his reform agenda. US equity futures are firm, but the...

The dramatic moves in the money market were investors discounting the acceleration of the tightening cycle among the major economies. Japan is the outlier as the central bank clings to the idea that the rise in price pressures will not be sustained. Other central bankers can talk about being data dependent, but some data are more important than others. Price data and inflation expectation measures are more important than real sector reports. Even after news of the...

Overview: Better than expected Chinese data and an unscheduled ECB meeting are the highlights ahead of the North American session that features the May US retail sales report and other high frequency data before the outcome of the FOMC meeting. Asia Pacific equities outside of Hong Kong and China fell. Europe’s Stoxx 600 is up almost 1% as it tries to snap a six-day slide. US futures are posting modest gains. Bond markets in Europe and the US are rallying. The ECB...

Overview: The markets' evolving expectations of a more aggressive monetary policy is not limited to the Federal Reserve, where the terminal rate is now straddling the 4% area, around 100 bp above late May levels. Consider that on May 31, the swaps market saw the key rate in the eurozone finishing the year at 60 bp. It has risen by more than 40 bp in the past four sessions. The UK expectedly reported the second consecutive monthly contraction in GDP, and still there...

Overview: The prospect of a more aggressive Federal Reserve policy has spurred a sharp sell-off in global equities and bonds and sent the dollar sharply higher. The large Asia Pacific bourses were off mostly 2%-4%. Europe’s Stoxx 600 is off 2.2%, its fifth consecutive losing session. US futures are off also. The NASDAQ was down 3.5% before the weekend and the S&P 500 fell 2.9%. The dollar rocks. The Scandis and Antipodean currencies are bearing the brunt and are...

The firmer than expected US CPI did not change expectations that the Federal Reserve will hike the Fed funds target by 50 bp on June 15.  What it did was boost the chances that the 50 bp steps will continue through at least November. The market also sees a greater chances of a 75 bp move.The reaction to the ECB's indication that it could raise rates by 50 bp in September failed to impress the foreign exchange market. By the end of Q3, the ECB may have hiked by 75 bp...

Three G7 central banks meet in the coming days, and they dominate the macro stage. The Federal Reserve's meeting concludes on Wednesday, the Bank of England on Thursday, and the Bank of Japan on Friday. The market recognizes a strong consensus has emerged at the FOMC for 50 bp hikes in June, but the unexpectedly strong CPI report before the weekend saw the market price in about a 50% chance of a 75 bp hike in July. Some Fed officials have been understandably...

Overview: Equity markets in Asia Pacific and Europe are weaker.  The main exception in Asia Pacific was India, where the market rose by about 0.75%.  Europe's Stoxx 600 is lower for the third consecutive session and is now down on the week.  US futures are up around 0.3%-0.4%.  The 10-year Treasury yield is hovering a little above 3%.  European peripheral yields are softer ahead of the ECB meeting.  New Zealand’s 10-year yield jumped eight basis points in response...